Consumer Confidence Drops To Lowest Since Feb.
NEW YORK (AP) — Americans’ view of the economy turned grimmer in September amid escalating job worries, falling to the lowest point since February.
The downbeat report, released Tuesday, raises more fears about the tenuous U.S. economic recovery. It also further underscores the disconnect between Wall Street and Main Street; consumers’ confidence fell further even as stocks rebounded in September.
The Conference Board, based in New York, said its monthly Consumer Confidence Index now stands at 48.5, down from the revised 53.2 in August. Economists surveyed by Thomson Reuters were expecting 52.5.
The reading marked the lowest point since February’s 46.4. It takes a reading of 90 to indicate a healthy economy — a level not approached since the recession began in December 2007.
Economists watch confidence closely because consumer spending accounts for about 70 percent of U.S. economic activity and is critical to a strong rebound.
The index — which measures how shoppers feel about business conditions, the job market and the next six months — had been recovering fitfully since hitting an all-time low of 25.3 in February 2009, but Americans are just as downbeat as they were a year ago.
In September 2009, the index stood at 53.4. Since then, it has mostly hovered in a tight range between the mid-40s and the high 50s. May 2010 was the peak, at 62.7.
One portion of the index, which measures how shoppers feel now, decreased to 23.1 in September from 24.9. The other, which measures consumers’ assessment of economic conditions over the next six months, fell to 65.4 from 72.0.
“Overall, consumers’ confidence in the state of the economy remains quite grim,” Lynn Franco, director of The Conference Board Consumer Research Center, said in a statement. “And, with so few expecting conditions to improve in the near term, the pace of economic growth is not likely to pick up in the coming months.”
Fears had been easing that the economy isn’t heading toward a double-dip recession amid a fresh batch of economic reports. While companies aren’t making lots of job offers, far fewer people are applying for unemployment, according to the latest figures from the Labor Department. And the nation’s trade deficit narrowed in July, due to a bigger appetite overseas for American exports.
September’s stock rally has put the Dow Jones industrial average back to about even for 2010. But Tuesday’s Conference Board’s report made investors jittery. The Dow Jones industrial average fell 80 points, or 0.7 percent, to 10,733.
Many Americans feel they’re still in a recession, even though it’s officially over. The National Bureau of Economic Research, the panel that determines the timing of recessions, concluded last week that the latest recession ended in June 2009 and lasted 18 months.
People are grappling with unemployment that’s stuck at nearly 10 percent as well as tight credit. And the housing market is still weak. Home prices ticked up in July for the fourth straight month, but many cities are bracing for declines in the year ahead, according to the Standard & Poor’s/Case-Shiller 20-city home price index.
The price increases were fueled by now-expired homebuyer tax credits. With the peak buying season over, a record number of foreclosures, job concerns and weak demand from buyers are pushing prices down.
The home price index increased 0.6 percent in July from June and 3.2 percent from a year ago. Twelve cities showed monthly price gains, while Cleveland’s prices were flat.
Meanwhile, the Commerce Department reported Friday that new homes sold at the second-slowest pace on record in August. Last month’s new home sales were unchanged from a month earlier at a seasonally adjusted annual sales pace of 288,000. Sales were down by 29 percent from the same month a year earlier.
The Consumer Confidence Index, based on a random survey mailed to 5,000 households from Sept. 1 to Sept. 21, showed how consumers’ fears about jobs worsened.
Those claiming jobs are “hard to get” rose to 46.1 percent from 45.5 percent, while those stating jobs are “plentiful” decreased to 3.8 percent from 4 percent. Consumers are also more pessimistic about future employment prospects. Those expecting more jobs in the months ahead remained essentially unchanged at 14.5 percent in September, compared with 14.7 percent in August. However, those anticipating fewer jobs increased to 22.7 percent from 19.6 percent.
(© Copyright 2010 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)